A farmer is considering planting five possible crop mixes. The outcomes depend on the weather (dry, average, or rainy).

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A farmer is
considering planting five possible crop mixes. The outcomes depend
on the weather (dry, average, or rainy). Assume the three possible
weather states have probabilities: dry = 30%, average = 40%,
rainy = 30%. Answer the following two questions.
Dry
Average
Rainy
Mix A
-1
1
9
Mix B
1
-1
5
Mix C
-1
5
4
Mix D
2
2
3
Mix E
5
3
2
Which planting
decision has the highest expected monetary value?
What is the expected
value of perfect information?
mix A
mix B
mix C
mix D
mix E
2.4
2.6
2.8
2.9
3.0